Asian Favorites: China, Taiwan, and South Korea

We remain bullish on Chinese equities in the near and long-term. Although the
market has soared, more upside could be in store, suggests global expert Yiannis
Mostrous, editor of Capitalist
Times.

Whereas US equities have surpassed their 2007 high by more than 30%, the Chinese
market still trades about 20% below its high.

In the Chinese market, investors should focus on the banks, brokerages, insurers,
and real estate companies. Bank stocks look particularly appealing and still
trade at roughly book value, despite the recent rally.

China Construction Bank (939:HK)
remains our top pick for investors who can purchase the local shares.

Despite its recent run-up, an inexpensive valuation and an influx of liquidity
to the Chinese equity market could drive further upside.

Banks should also continue to benefit from recent financial reforms enacted
in Beijing. With an almost 5% dividend yield, China Construction Bank Corp's
local shares remain a buy up to HK$8.50.

The liquidity sloshing around China's equity market is also moving into neighboring
countries.

Taiwan's equity market should benefit from growing Chinese investment in equities;
US-based investors should buy iShares MSCI Taiwan (EWT)
up to $19 per share to gain exposure to this trend.

Investors can add exposure to South Korean equities through Deutsche X-trackers
MSCI South Korea Hedged Equity (DBKO),
an ETF that provides broad exposure to the market while hedging against fluctuations
in the value of the US dollar relative to the South Korean won.

We also continue to like Shinhan Financial Group (055550:KS)
(NY:
SHG), one of South Korea's four largest financial institutions. Diligent
risk management has translated into sterling asset quality.